Abstract: This paper challenges the conventional wisdom regarding the standard used by the FDA to approve new drugs. In particular, this paper shows how the FDA definition of effectiveness as effective beyond a placebo negatively impacts public health by denying consumers the benefit of a proven placebo treatment even when it is the only, or the safest, treatment available.

Russell S. Sobel is a Visiting Scholar at the Initiative for Public Choice & Market Process in the Department of Economics & Finance at the College of Charleston.